Increasing demand and decreasing costs are making solar energy more attractive and affordable to solar developers, leading to more profitable investments in solar energy. In 2015, the federal government renewed the Investment Tax Credit (ITC). The ITC is a 30% credit of all expenditures related to equipment that generates electricity. This means that solar developers receive a 30% reduction in income taxes that they would otherwise owe the federal government. The renewal of the ITC will boost construction of solar projects around the country.
In addition to the ITC renewal, renewable energy mandates across the country have been steadily increasing. In Oregon, for example, the House of Representatives recently passed HB 4036. This bill is a mandate that will require large utility companies in the state to provide their customers with 50% renewable energy by the year 2040. (The current mandate is for 25% renewable energy by 2025). The Oregon State Senate will vote on this bill in late February. If passed, this law and others like it will create increasing demand for solar energy. There are currently 30 other states with similar mandates, increasing the demand nationwide. Other states besides Oregon are also strengthening their current mandates. For example, Hawaii has already adopted a series of mandate milestones for its utilities in the coming years. Their final mandate is to be 100% renewable by the year 2045. It is possible that the federal government could also begin mandating utilities across the country to convert to renewable energy sources like solar power.
The cost of crystalline photovoltaic (PV) cells has decreased dramatically over the past several years, making solar energy more profitable. In 2005, the cost of PV cells was around $5.00 per watt. By 2015, that number had fallen to around $.30 per watt (according to Bloomberg New Energy Finance). This is a 94% decrease over the 10-year period, and the cost will continue to decrease in the future.
For the first time, solar energy is becoming a significant source of electricity in the United States. Economical and political forces will continue to expand solar energy development for the foreseeable future. Because of this, we expect the growth in solar development related to residential, non-residential, utility, and concentrating solar power to increase as the following graph demonstrates.